ENGRO Corporation (ENGRO): 1Q2018 EPS of Rs8.0, +48% YoY (+68% QoQ); DPS Rs5/share (In line with expectations)
- Engro corporation (ENGRO) announced its financial results for 1Q2018, where company’s earnings portrayed robust growth of 48% YoY to Rs8 per share, mainly due to strong growth unveiled by fertilizer and polymers business.
- ENGRO reported net revenue growth of 49% YoY to Rs33.5bn during 1Q2018, as fertilizer and polymers businesses witnessed growth of 81% YoY and 28% YoY to Rs18bn and Rs8.7bn, respectively.
- Fertilizer segment surged on the back of increase in urea sales volumes by 89%YoY to ~510k tons. While polymer business recorded highest ever sales volume of 54k tons, up 23% YoY.
- ENGRO’s gross margins were up ~5ppts YoY to 35%, largely driven by fertilizer business where, 1) urea retention prices were higher by 2-3% and 2) Subsidy disbursement mechanism was changed for DAP (cash subsidy was replaced with reduced sales tax of Rs100/bag).
- Other income went up by 10% YoY to Rs2.6bn due to inclusion of one time insurance gain of ~Rs276mn in polymer segment.
- We highlight 1) poor crop season, 2) scarcity of water for sowing season 3) volatility in Polymer margins and 4) change in regulatory structure in energy division as key risks for the holding company.
Engro Corporation is an agri based company. Co.'s core business is the manufacturing, purchasing and marketing of chemical fertilizers and seeds. Co. is engaged in the production of Urea fertilizer in Pakistan which is manufactured at Daharki and marketed under brand name Engro. Co. also maintains a seed business and is marketing imported hybrid and open pollinated seeds of maize and sunflower crop under the brand name of Bemisal. Co. has investments in joint ventures engaged in chemical terminal and storage, PVC resin manufacturing and marketing and Automation and Controls businesses.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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